IBM has agreed to a $17 million settlement with the U.S. government following allegations that its diversity, equity, and inclusion (DEI) policies discriminated against employees and job-seekers. The Department of Justice (DOJ) announced the settlement, which is significant as it is the first secured under the Civil Rights Fraud Initiative initiated in May 2025 by the Trump administration. This initiative aims to hold government contractors accountable for DEI-related complaints under the False Claims Act of 1863, which allows for triple damages and civil penalties for fraud against the government.

The DOJ claimed that IBM violated the False Claims Act by certifying compliance with anti-discrimination requirements in its federal contracts while allegedly maintaining discriminatory practices. These included using a diversity modifier that linked bonus compensation to achieving demographic targets, altering interview criteria based on race or sex, and developing demographic goals that influenced hiring decisions. Furthermore, the DOJ accused IBM of providing training and leadership opportunities selectively, based on race or sex, and charging the federal government for costs associated with these practices.